I recently put my house here in Dallas on the market for $295k and just accepted an offer for $285k. It is definitely a buyer's market here so I'm lucky to get this amount.

Why am I selling? The ever increasing costs of homeowner's insurance and property taxes make it not worth it in my opinion. I have seen my homeowners insurance increase at least 10% a year for the last 4 years - now $2100 a year. Additionally, I have seen my property taxes raised 20% every two years over the last 4 years - now at $7100 a year.

I don't see these increases ever stopping (especially the property taxes) so I'm getting out. I just found a deal on a 3BR / 2 BA apartment in a very popular part of town for $1595 a month. They had a special going where I get 2 months free on a year lease bringing the total rent down to $1329 / month. My insurance will drop to $150 a year and I no longer pay property taxes.

In my apartment I no longer have to pay a gas or water bill - these averaged me about $125 / mo in my house. I no longer have to pay homeowner's dues of $80 a month and I have also eliminated appx $3k in annual house repairs, maintenance, etc.

My CPA told me I will lose about $4k / yr on my tax return by not have mortgage interest and property taxes to deduct. By my calcualations, I will save $10,510 a year by renting. In addition, I will get $65k at my closing to stick in a savings account.

I appreciate any feedback on this to see if anyone disagrees with my assessment of the situation.

verytasty

Member

posted: May. 23, 2004 @ 7:14p

What part of Dallas was your house located in and what part of Dallas did you move to? Just curious.

Obviously a big part of it depends on the quality of landlord you have at your apt complex.. if they are sleazy no amount of money can overcome the potential hassle they might give you.. also, they might choose to raise the rent without much notification and entirely at their discretion.

Have you tried to petition at the office to get your assessed value lower so that your property tax becomes lower? I have done it before with success and have saved quite a bit of money.

teplitsa

Frivolous Member

posted: May. 23, 2004 @ 7:21p

are you ever going to buy again? remember that someday the home will be paid off and you will no longer have to pay the mortgage, your property taxes will probably decrease and you can decline to purchase homeowner's insurance. But you will have to pay rent till the day you die. Long term you will lose money since every cost increase like increased property taxes will be passed along in the form of higher rents.

I suggest you decline the offer and not sell.

SUCKISSTAPLES

FW Historian

posted: May. 23, 2004 @ 7:22p

that prop tax and insurance is ridiculous, i probably wouldnt pay to be a homeowner in that environment.

for a similar value home in CA, prop tax and insurance would be about $280/month combined.

criticofsociety

Senior Member

posted: May. 23, 2004 @ 7:30p

I would dump the apartment. Live in a used RV.

unknownshopper

Senior Member<br>6K

posted: May. 23, 2004 @ 7:39p

teplitsa said: [Q]are you ever going to buy again? remember that someday the home will be paid off and you will no longer have to pay the mortgage, your property taxes will probably decrease and you can decline to purchase homeowner's insurance. But you will have to pay rent till the day you die. Long term you will lose money since every cost increase like increased property taxes will be passed along in the form of higher rents.

I suggest you decline the offer and not sell.

1. 30 years ago people paid off their mortgages. No so true today.2. Property taxes decrease? I suppose that could happen, but I've never seen it.3. Decline to purchase homeowners insurance? I'd be concerned about giving my heirs the reason to have me declared mentally incompetent.

Pocketing 10k per year tax free sounds like a good deal to me. There's no law saying you can't buy back in if/when the cost/benefit analysis ever changes.

Kudos to OP for not being a sheep.

dataspaz

Thrifty Member

posted: May. 23, 2004 @ 7:41p

I live in North Dallas - Dallas County. I'm moving towards downtown. I'm not worried about the landlord issues since this is a large apartment complex owned by a publicly traded company.

I will buy again once I see that insurance and taxes stabilize and I find a house I'm willing to live the next 15+ years in. Over the next 3 years I plan to put $20k a year in savings thus giving me an extra $60k for a down payment if I decide to buy again.

teplitsa

Frivolous Member

posted: May. 23, 2004 @ 7:45p

unknownshopper said: [Q]teplitsa said: [Q]are you ever going to buy again? remember that someday the home will be paid off and you will no longer have to pay the mortgage, your property taxes will probably decrease and you can decline to purchase homeowner's insurance. But you will have to pay rent till the day you die. Long term you will lose money since every cost increase like increased property taxes will be passed along in the form of higher rents.

I suggest you decline the offer and not sell.

1. 30 years ago people paid off their mortgages. No so true today.2. Property taxes decrease? I suppose that could happen, but I've never seen it.3. Decline to purchase homeowners insurance? I'd be concerned about giving my heirs the reason to have me declared mentally incompetent.

Pocketing 10k per year tax free sounds like a good deal to me. There's no law saying you can't buy back in if/when the cost/benefit analysis ever changes.

Kudos to OP for not being a sheep.

Just because people don't do it today, doesn't mean you can't.Many localities will cut property taxes by 75% for retirees or people over a certain age.

teplitsa

Frivolous Member

posted: May. 23, 2004 @ 7:47p

dataspaz said: [Q]I live in North Dallas - Dallas County. I'm moving towards downtown. I'm not worried about the landlord issues since this is a large apartment complex owned by a publicly traded company.

I will buy again once I see that insurance and taxes stabilize and I find a house I'm willing to live the next 15+ years in. Over the next 3 years I plan to put $20k a year in savings thus giving me an extra $60k for a down payment if I decide to buy again.

not sure if it will happen in texas. Last year the WSJ had an article about the sky rocketing claims of fungus or whatever it was from water damage. you can't make money colleting $1.00 in premiums and paying out $1.50 in claims.

dataspaz

Thrifty Member

posted: May. 23, 2004 @ 7:50p

teplitsa said: [Q]dataspaz said: [Q]I live in North Dallas - Dallas County. I'm moving towards downtown. I'm not worried about the landlord issues since this is a large apartment complex owned by a publicly traded company.

I will buy again once I see that insurance and taxes stabilize and I find a house I'm willing to live the next 15+ years in. Over the next 3 years I plan to put $20k a year in savings thus giving me an extra $60k for a down payment if I decide to buy again.

not sure if it will happen in texas. Last year the WSJ had an article about the sky rocketing claims of fungus or whatever it was from water damage. you can't make money colleting $1.00 in premiums and paying out $1.50 in claims.

I agree with you. Another reason I doubt I will buy again in Texas - probably another state.

TheWiseGuy

Senior Member - 1K

posted: May. 23, 2004 @ 8:25p

while ur at it, get a new accountant.

jazzhands

Shopaholic Member

posted: May. 23, 2004 @ 8:40p

Interesting logic. Are you providing financing for the buyer with a contract for deed? This is another angle to look at for people evaluating similar situations.

SUCKISSTAPLES

FW Historian

posted: May. 23, 2004 @ 8:48p

criticofsociety said: [Q]I would dump the apartment. Live in a used RV. this may sound far fetched, but actually isnt a bad option for a single person or couple....I see SWEET loaded , barely used RVs at auction ALL the time. And with Bay Area housing costs, it can be WAY cheaper than an apt.

You can get a fully equipped late model RV for under $20k at auctions, that sold new for $60-90k, or you can get an older one for $3-4k or less. A little research and you can find safe, free places to park and maybe once a week visit an RV park to dump waste, refill, etc.

You can get your cost of living under $200/month.

teplitsa

Frivolous Member

posted: May. 23, 2004 @ 9:08p

question for the OP. If you're single, why rent a 3BR? a 1BR or a studio will do if you want to save money.

kbiekert

Broke Member

posted: May. 23, 2004 @ 9:30p

Just one thought -- after you are used to the freedom of a home, going back to a community / apartment situation may suck more than the benefit of the savings. Some things you just can't put a price on.

I'm in Houston -- and fully understand what you're going through. Have you protested your taxes? If so, have you gotten a service to do it?

I just got a flyer in the mail from www.cutmytaxes.com. 1-877-4taxcut in Texas, 713-290-9700 Houston. They are a professional tax cutting service that will protest (Hurry - May 31st is deadline!!) for you for free. They charge you 1/2 of the savings for the decrease in assessed value. I've gotten it as low as I can, and think mine is significantly under valued. But I figure, what the hey -- if they don't lower it again it costs me nothing. I know I could not get it any lower.

I know that alone won't change your mind -- but may be of benefit to others. I am sure each state has some service like this, and I'm sure there are others in Texas. This is just on top of my mail pile today.

ktulu

Senior Member

posted: May. 23, 2004 @ 9:38p

I think selling was a good move. From my POV, the future of the RE market doesn't look too good (atleast for the short term)... If the RE market corrects itself in the near future, you will have sidestepped that downturn. On top of that, if/when IR drives prices down (hmmm...very likely)...then because you will be able to finance a good portion of your next purchase yourself, it will essentially cost you less (because you wont have to use as much expensive mortgage financing).

If the RE market doesn't undergo a correction (a possibility), you are still in a better position by being on the sidelines (renting), and should be able to get back in the realms of homeownership without a problem (I highly doubt there will be another RE price boom in the next few years.)

p.s. that 'fungus' thing...its actually toxic mold. Most homes do have mold, but not all mold is toxic...

p.s.s. unless you've lived in a RV for an extended period of time...the 'coolness' factor of an accessories loaded RV dies very quickly...unless of course its an ex celebrity's multi-million dollar 3 story RV. I'd rather live aboard a nice yacht over an RV anyday.

p.s.s.s. I've lived in apt owned by corporations and they just look 'nice'...but they generally suck (for my tastes). Of course every corp is different and everyones taste vary...

Ramias

Member

posted: May. 23, 2004 @ 9:41p

Property tax in Texas (esp. Dallas county) is quite high. I looked in a different suburb there a few years ago and property taxes were well over 3%, which can certainly add up. No state income tax, but high home owners insurance, high property tax, and a continuous buyers market make it tough to justify purchasing.

dataspaz

Thrifty Member

posted: May. 23, 2004 @ 9:44p

I'm not single - I have a fiance that lives with me.

I have protested my taxes in the past. The tax assessor was only willing to take $5k off the value of my home - that saved me a little over $100 in property taxes for the year. That's just not enough.

I might miss the freedom of being a homeowner but I will not miss the maintenance, risk or stress associated with it either. In my four years of being a homeowner, I had a hot water heater rupture all over my kitchen floor and a plumbing leak that came through my first floor ceiling. It's things like this I will not miss - it will be nice just to call the property manager and make it their problem.

orphanis

Senior Member - 1K

posted: May. 23, 2004 @ 9:49p

teplitsa said: [Q]Many localities will cut property taxes by 75% for retirees or people over a certain age.Is not it age discrimination? Why would people of different age have to pay different $$ in taxes.I chose to rent vs. to buy because it looks like due to my career I change jobs every two years and if renting I can easily move within a walking distance from my place of work. Another reason I would never afford to buy the apartment I am renting.

grimani

Senior Member

posted: May. 23, 2004 @ 9:56p

orphanis said: [Q]teplitsa said: [Q]Many localities will cut property taxes by 75% for retirees or people over a certain age.Is not it age discrimination? Why would people of different age have to pay different $$ in taxes.

people of different incomes pay different taxes.

is that not class discrimination?

colebert

Senior Member - 5K

posted: May. 23, 2004 @ 10:02p

SUCKISSTAPLES said: [Q]criticofsociety said: [Q]I would dump the apartment. Live in a used RV. this may sound far fetched, but actually isnt a bad option for a single person or couple....I see SWEET loaded , barely used RVs at auction ALL the time. And with Bay Area housing costs, it can be WAY cheaper than an apt.

You can get a fully equipped late model RV for under $20k at auctions, that sold new for $60-90k, or you can get an older one for $3-4k or less. A little research and you can find safe, free places to park and maybe once a week visit an RV park to dump waste, refill, etc.

You can get your cost of living under $200/month.

I just KNEW you'd say that. :-p

orphanis

Senior Member - 1K

posted: May. 23, 2004 @ 10:03p

grimani said: [Q]orphanis said: [Q]teplitsa said: [Q]Many localities will cut property taxes by 75% for retirees or people over a certain age.Is not it age discrimination? Why would people of different age have to pay different $$ in taxes.

people of different incomes pay different taxes.

is that not class discrimination?

I believe that discrimination based on sex, age, race, nationality and something else is pretty illegal. The tax rate based on income is not included in the law. One can change income and therefore tax rate, changing sex, age, race, nationality (without plastic surgery) is kinda problematic

Polsk

Broke Member

posted: May. 23, 2004 @ 10:44p

dataspaz said: [Q] I have seen my homeowners insurance increase at least 10% a year for the last 4 years - now $2100 a year.

Is that a typo or the going rate for Homeowners Insurance in Dallas?

Hmm, I guess it is time to re-evaluate my policy which is at $260 a year.

copper13

New Member

posted: May. 23, 2004 @ 10:48p

The tax & insurance issue isn't a factor in my decision to build a house out in the country. BUT I'm living in an older, nice, clean, used motorhome while my house is being built. I'm single and it's cheap living! Especially since I'm livin' on my 50 acres while construction is going on...I think my electric bill was $16 last month (that's with the $7 monthly fee for the electric co.'s utility pole-mounted security light).

orphanis said: [Q]grimani said: [Q]orphanis said: [Q]teplitsa said: [Q]Many localities will cut property taxes by 75% for retirees or people over a certain age.Is not it age discrimination? Why would people of different age have to pay different $$ in taxes.

people of different incomes pay different taxes.

is that not class discrimination?

I believe that discrimination based on sex, age, race, nationality and something else is pretty illegal. The tax rate based on income is not included in the law. One can change income and therefore tax rate, changing sex, age, race, nationality (without plastic surgery) is kinda problematic

First, I think the 'idea' behind giving *seniors* a discounted tax assessment value is the assumption that they are 'retired' and hence have a lower income (perhaps a stipulation is that their net worth is under a certain amount also??). The 'idea' behind this discount is generally that the increasing property tax payments would force a *senior* out of their home (because they dont have the income for it)...

The idea that *seniors* are generally low income is pretty much wide spread (regardless of whether or not it is true or not for a particular senior)...hence you have 'senior discounts' on pretty much everything. We as a society dont want to exclude (by prohibitive costs) seniors from enjoying the rest of their (low income) lives...

Age discrimination? we live in a society that (in general) doesn't find underage drinking or underage sex *acceptable*...we have laws aimed at this. It's illegal to let a 8 year old boy into a strip club and to serve him a few long islands.

Income can be a basis for discrimination...while there is some mobility (poor gets poorer, rich get richer?), changing income level is not as easy as changing shoes. And not all people experience all income levels...but MANY folks DO experience all the different 'ages' of a human life. Is it discrimation that an old folk has to (eventually) die just because he is old...or is it just a fact of life?

okay...I am offtopic again...peace out.

rufruf44

Senior Member

posted: May. 23, 2004 @ 11:16p

$3000 in house maintenance sounds high, I don't think I spend even 1/3 of that in the 2yrs living in this house. Property tax is just nuts though, I guess thats where they get their money since there's no state income tax.

Derffie

Senior Member - 2K

posted: May. 23, 2004 @ 11:37p

ktulu said: [Q]First, I think the 'idea' behind giving *seniors* a discounted tax assessment value is the assumption that they are 'retired' and hence have a lower income (perhaps a stipulation is that their net worth is under a certain amount also??). The 'idea' behind this discount is generally that the increasing property tax payments would force a *senior* out of their home (because they dont have the income for it)...

The idea that *seniors* are generally low income is pretty much wide spread (regardless of whether or not it is true or not for a particular senior)...hence you have 'senior discounts' on pretty much everything. We as a society dont want to exclude (by prohibitive costs) seniors from enjoying the rest of their (low income) lives...

I always thought that the reason there was a property tax break for seniors was because since they no longer had kids in public school it was unfair to make them pay the part of property tax related to schools.. thanks for clearing up my misconception.

chiefw

Senior Member

posted: May. 24, 2004 @ 12:48a

Derffie said: [Q]I always thought that the reason there was a property tax break for seniors was because since they no longer had kids in public school it was unfair to make them pay the part of property tax related to schools.. thanks for clearing up my misconception.

I don't have kids, I should pay less property tax for schools too!

SUCKISSTAPLES

FW Historian

posted: May. 24, 2004 @ 2:07a

dataspaz said: [Q] In my four years of being a homeowner, I had a hot water heater rupture all over my kitchen floor and a plumbing leak that came through my first floor ceiling. It's things like this I will not miss - it will be nice just to call the property manager and make it their problem. A home warranty would have eliminated those expenses. Costs about $300-400/year

FatMallet

Member

posted: May. 24, 2004 @ 4:32a

chiefw said: [Q]I don't have kids, I should pay less property tax for schools too!

In that case you are paying others' kids to stay in school. Otherwise, your windows might get smashed every other day. <img src="i/expressions/face-icon-small-happy.gif" border=0>

Jim1504

Senior Member

posted: May. 24, 2004 @ 7:06a

OPI may have missed it but did you mention the loss of anticipated appreciation on the house. I live near Dallas and my home has appreciated at least $15k per year ($250k house).

dumbredneck

Senior Member

posted: May. 24, 2004 @ 7:12a

you can't anticipate that that will continue.... As interest rates rise, more people won't be able to afford to move up, and lots of people won;t be able to afford to sell!!

teplitsa

Frivolous Member

posted: May. 24, 2004 @ 7:14a

Polsk said: [Q]dataspaz said: [Q] I have seen my homeowners insurance increase at least 10% a year for the last 4 years - now $2100 a year.

Is that a typo or the going rate for Homeowners Insurance in Dallas?

Hmm, I guess it is time to re-evaluate my policy which is at $260 a year.

texas and some other states have sky rocketing mold claims. I've read stories that some insurance companies are going bankrupt or pulling out of the state. it's also so bad that if a house has a mold claim, it will never be insured again.

dgtop

Dismembered Member

posted: May. 24, 2004 @ 7:14a

Have you included in your calculations the value of the appreciation that is netting you the 65k for your savings?

Also have you considered that your rent/mortgage payment isnt really black and white?

Say your mortgage payment/rent is the same at 1600.

Of that 1600 payment (towards mortgage) about 300 goes toward principle (putting it in a piggy bank essentially) so your real payment is 1300 (interest) which is of course tax deductible. Your rent is 1600 flat

I dont think you are doing anything better economically for yourself. But if you dont like the hassels or responsibility of homeownership more power to you.

Megamorph

Member

posted: May. 24, 2004 @ 7:39a

I can certainly understand where OP is coming from. I just purchased my first home and I'm having serious second thoughts.

My home is in Houston, TX. My property taxes are $11,976/yr and my Homeowners insurance is $3,200/yr.

dataspaz

Thrifty Member

posted: May. 24, 2004 @ 8:09a

Responding to some questions....

1) "$3000 in house maintenance sounds high, I don't think I spend even 1/3 of that in the 2yrs living in this house."

Actually, everything I've read says average annual home maintenance is 1% of home value so this is about right.

2) "A home warranty would have eliminated those expenses. Costs about $300-400/year."

The home warranty did cover the hot water heater and plumbing repairs but it did not cover the damage caused by those two events. (and I wasn't about to file an insurance claim)

3) "I may have missed it but did you mention the loss of anticipated appreciation on the house."

Yes - If you believe your house will continue to appreciate then you will not like my decision. The price of homes in Dallas is already dropping and if taxes and insurance continue to rise - how can people afford a more expensive home? My objective is to get out while I can get the best price for my home.

FYI - I found an interesting site where realtors give their opinion of local market conditions. See the link below for their take on the Dallas market - prices are beginning to fall and it is a buyer's market. Scroll to the bottom of the page.

I'm with OP here, I think in his situation, I'd sell and move into an apartment, too. However, then I'd look for another place to move to and live. To each his own <img src="i/expressions/face-icon-small-smile.gif" border=0>

SkyFwd

Handsome Member

posted: May. 24, 2004 @ 9:09a

I live in CA where the houses have doubled in value over the past two years. Basically an average three bedroom/two bath house cost about $400-$450K and a four bedroom/three bath house cost $450-$550K. These house usually sell within a few hours of being listed for $10-$20K over listing price.

I would love to sell and move into an apartment until next summer. I believe the same house I sell today, I could rebuy next summer for a $100K less. No one believes me! But what goes up must come done!

ninasgramma

Senior Member

posted: May. 24, 2004 @ 9:23a

We sold our house in Pennsylvania when it was about to be reassessed and the taxes would have been about $10K/year. We moved to Louisiana and have a nicer house with property taxes under $2K/year and a frozen assessment because we are retired. The school system is not an issue for us; we waited to make the move until the children were gone. We are very happy with our decision.

I agree that the high real estate taxes, homeowners' insurance, and the diminished tax advantages of home ownership make home ownership a questionable decision in certain areas of the country.

DFWMovieGeek

Member

posted: May. 24, 2004 @ 9:43a

Renting is not bad. I have lived off in North Dallas near Addison on Montfort.

The only problem is your rent is going to go up with each lease renewal. The giveyou a nice "SPECIAL" to get you in. Once they have you in, your rent will go up.The only way to circumvent this, is to move to another apt for another "SPECIAL"

Skipping 166 Messages...

memberkgb

Senior Member

posted: Jun. 20, 2004 @ 4:26p

Im a little late, but this can also depend on your age. If you put your kids though college, go out and get yourself a nice luxury apartment in Florida. They are affordable, very luxurious adn some are the size of houses. Just my $0.02

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